Week 13
This week we made a lot of progress on figuring out our costs and honing in on who our customer is.
After talking to Professor Gutierrez and her grad students, we've learned that the cost to manufacture our solar optics greywater reuse device is similar to that of solar panels. We looked up the cost of producing a solar panel and found that it was between $1 - $2 per watt.
Our solar optics systems are 5 kilowatt systems and as of January 2017, the average cost of a solar panel system is $3.26 per watt or $16,300 for a 5 kilowatt system. (Source: http://news.energysage.com/5kw-solar-systems-compare-prices-installers/). After talking to the contractor we are in contact with, we learned that the cost to install the system may cost a few hundred dollars so we estimate the final cost of our entire system to be $17,000 for the consumer.
Our go-to-market strategy involves going directly to home builders like KB Homes and NVR (among others) and selling our systems to them in bulk. We plan on focusing in California in year one.
There are approximately 92,000 homes built in CA every year. If we can integrate our system into just 1% of these homes that will be 920 homes. The cost of our system is $17,000 each so we would make about 15 million in gross revenue. Since our manufacturing cost is approximately $1 per watt and $5000 for a 5kW system our total manufacturing cost is about $4.6 million and so our net profit pre tax would be around $10.4 million. If we stayed at this number for 5 years we would make a total profit of $52 million.
Researching the statistics and numbers to guesstimate our costs really helped us understand the home building, construction, and solar industries better. We now know who the major players are (SolarCity, SunRun, etc.), we figured out the people doing similar services to us, and finally we know which companies we can sell to specifically.
Our pitch deck is also coming along well -- Nick and Varsha are working on the design and adding content to the slides and Niels and Nitin are working on the P&L statement. Lei is also helping out with everything as well as researching more for additional content to present.
Our solar optics systems are 5 kilowatt systems and as of January 2017, the average cost of a solar panel system is $3.26 per watt or $16,300 for a 5 kilowatt system. (Source: http://news.energysage.com/5kw-solar-systems-compare-prices-installers/). After talking to the contractor we are in contact with, we learned that the cost to install the system may cost a few hundred dollars so we estimate the final cost of our entire system to be $17,000 for the consumer.
Our go-to-market strategy involves going directly to home builders like KB Homes and NVR (among others) and selling our systems to them in bulk. We plan on focusing in California in year one.
There are approximately 92,000 homes built in CA every year. If we can integrate our system into just 1% of these homes that will be 920 homes. The cost of our system is $17,000 each so we would make about 15 million in gross revenue. Since our manufacturing cost is approximately $1 per watt and $5000 for a 5kW system our total manufacturing cost is about $4.6 million and so our net profit pre tax would be around $10.4 million. If we stayed at this number for 5 years we would make a total profit of $52 million.
Researching the statistics and numbers to guesstimate our costs really helped us understand the home building, construction, and solar industries better. We now know who the major players are (SolarCity, SunRun, etc.), we figured out the people doing similar services to us, and finally we know which companies we can sell to specifically.
Our pitch deck is also coming along well -- Nick and Varsha are working on the design and adding content to the slides and Niels and Nitin are working on the P&L statement. Lei is also helping out with everything as well as researching more for additional content to present.
That's amazing that you have been able to get the numbers for your product down to such detail- it's something that my group has been struggling with. Nice researching skills! Are you planning on manufacturing the systems yourselves and then selling the final product? If so, it might be good to look into locations for that.
ReplyDeleteHey! Getting the numbers fixed always seems to be a big issue as there are so many variables to consider. Your team's research looks solid and I hope the rest of the P&L calculation works out as you would like it to be. I believe just by making a persuasive P&L statement, it is enough to trigger the investors to be interested in the product. However, your product looks like it would require alot of R&D (considering the scale and technology) and I personally think it might be useful to give this a thought.
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